Pizza Express was started in London in 1965 and can be found throughout the globe. In March this year Cinven Ltd announced that it would consider selling the Pizza Express chain during the break up of its Gondola Group Ltd Restaurant unit. The auction process attracted attention from many investors one of which being a Chinese firm Citic however, it was announced on the 12th July that the rival Beijing-based Hony Capital had successfully won the bid. The Italian restaurant chain was sold for around £900m. This is the largest European restaurant deal in five years.
Pizza Express operates just over 400 restaurants in the UK and a number of restaurants abroad. It opened its 500th restaurant last month in Beijing adding to its growing high street presence in China. There are currently 22 restaurants in China and, with this acquisition, it is confirmed that an expansion in Asia is part of the future growth strategy for the firm. Pizza Express has adapted its menu to suit Asian tastes by including ingredients such as aromatic duck. However, the popularity of western food in China is growing and the firm is looking to take advantage of this movement.
The acquisition will enable the chain to expand in China and the rest of Asia taking advantage of Hony’s 10 years of experience. Hony Capital focuses their investment in consumer sectors and this is the first takeover they have made in the UK. Hony has helped a number of enterprises grow into sector leaders in China; this bodes well for Pizza Express.
Lord Sassoon, the former Treasury minister, believes that the UK and China are ‘indispensable and equal partners for each other’s development’. It appears that investments are growing and corporate relationships are strong with invest from China to the UK is up 93% from last year. According to Deutsche Bank, Chinese outbound mergers and acquisitions activity rose from $1bn to $50bn in the past 10 years and Britain is the most popular European destination for Chinese investment.
In 2012, the Chinese state-owned Bright Food bought a majority stake in the 80 year old breakfast cereal Weetabix. Weetabix, produced in Northamptonshire, is becoming popular with the wealthier Chinese citizens who are demanding westernised foods. The move away from traditional foods in China is another form of cultural divergence between eastern and western nations. It seems that UK food producers are welcoming the opportunities to expand into Asia as tastes change.
In addition to these household names exploiting the Asian market, top celebrity chefs are also looking to expand their own brands into Asia. Gordon Ramsay has backed the UK Trade and Investment’s (UKTI) Food and Drink programme. He also supports the food is GREAT campaign to encourage UK suppliers to expand into Asia. The GREAT Britain campaign is a Government programme and is the most ambitious marketing campaign ever to showcase what Britain has to offer. Britain is using this campaign to boast about its tourist attractions, education establishments and business opportunities.
The UKTI’s executive chief said ‘it is clear that the Asian palette is not only accustomed to, but is now demanding British cuisine’. Last year, the UK exported around £50bn of goods to Asia of which £1.8bn was food and beverages. Asia is adopting parts of the British diet in many ways; among the most popular exports from the UK were the classic ingredients for fish and chips. In the same year over £100m worth of fish and £7m of potatoes were exported to Asia. Seafood exports to China have grown by 44% in the last year and firms continue to build on a long tradition of trade with the South East Asian marketplace.
The Food and Drink sector in the UK’s largest manufacturing sector turning over £76bn and employing 400,000. The food sector sells 30% of their products overseas and this figure may increase with more demand from developing nations. Even with the global economic downturn this sector has continued to expand. It appears that there are lucrative opportunities available in Asia and British food and drink firms are rushing to take advantage of them.
I don’t believe that this will be the last acquisition of a British food and drink firm by a Chinese investor. The relationship between China and Britain will continue to grow stronger and the changes Chinese food consumption trends will be a major driver for UK exports in the coming years. Globalisation of the food industry will inevitably occur with developed nations exporting or expanding to the rapidly developing countries in South East Asia.
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